FIIs Pour ₹15,000 Crore Into Indian Equities Ahead of Diwali

Synopsis

On Thursday, November 5, foreign institutional investors (FIIs) added ₹14,975 crore worth of Indian stocks, exchange data showed. A news outlet quoted Reuters as saying that it was the biggest net investment in almost six years in a single day. The inflow was driven by the waning demand for the U.S. equity market from global investors on the sidelines of AI. Domestic institutional investors (DIIs) were net sellers. Now foreign buying has reached a mark of ₹35,000 crore in five sessions.

Data from exchanges shows that foreign institutional investors purchased shares worth of ₹14,974.68 crore on Thursday. The buying was the biggest single-day net purchase in almost six years.

The recent run

It was after inflows that the purchase took place. FIIs purchased assets worth of ₹7,284 crore on November 4 and the 5-session total might be ₹35,781 crore, according to one strategist. They were net buyers on their second consecutive session with a buy of ₹3,114.68 crore on November 2. The sequence comes after October when foreign inflows were mixed, with foreign sales of ₹1,462.49 crore on October 26, and foreign purchases of ₹4,240.39 crore on October 27.

What drove it

In the global market, investors pulled out of AI-related stocks as they grew worried about investment sustainability and valuations for technology stocks. This was helped by the drop in crude oil prices that also buffeted India's import bill.

Domestic institutional investors, while posting net sales of ₹10,444 crore on Thursday, were compensated by foreign investors' buying as they exited to book profits.

Market impact

The influx was happening at the same time of a big rally. The Sensex and Nifty were up 2.60 per cent and 2.40 per cent, respectively. Gains were concentrated in large caps, which are the typical ones that foreign mandates are usually directed at.

One day flows may turn around. There's something I found relates to something you mentioned in your notes that's ₹54,925 crore over three weeks, but I can't confirm that, so I didn't include it. Earlier this year, a market education website had reported that during the first couple of months, foreign investors withdrew more than ₹1,500 crore. This background illustrates the changing direction of foreign flows this year.

Look for continuation of buying over the next week and the low price of crude oil below $100.